United States v. Caribbean Ventures, Ltd.

• Citation: 387 F. Supp. 1256
• Decision Date: 20 December 1974
• Docket Number: Civ. No. 74-1973.
• Parties: UNITED STATES of America and Civil Aeronautics Board, Plaintiffs, v. CARIBBEAN VENTURES, LTD., d/b/a Reef Casino, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

387 F. Supp. 1256

UNITED STATES of America and Civil Aeronautics Board, Plaintiffs, v. CARIBBEAN VENTURES, LTD., d/b/a Reef Casino, et al., Defendants.

Civ. No. 74-1973.

United States District Court, D. New Jersey.

December 20, 1974.

Jonathan L. Goldstein, U. S. Atty. by George E. Mittleholzer, Asst. U. S. Atty., Newark, N. J., James W. Tello, C. A. B., and Thomas C. Halloran, F. A. A., of counsel, for plaintiffs.

Boros & Garofalo by Howard S. Boros, Washington, D. C., for Caribbean Ventures, Ltd. d/b/a Reef, Anthony Velardi, and Phillip Snyder.

Palmer & Lazar by Bruce E. Lazar, Miami, Fla., for L & S International, Inc., Eastern Aircraft Services, Ltd., R. K. K. Corp. and Leonard Simkovitz.

MEMORANDUM OPINION

LACEY, District Judge.

The United States of America, acting on behalf of the Federal Aviation Administration, and the Civil Aeronautics Board, sues to enjoin a proposed course of conduct engaged in by the defendants, jointly and severally, which is scheduled for December 21, 1974, and thereafter. The defendants are Caribbean Ventures, Ltd. (CVL), an Antigua corporation, and others, some of whom I shall generically style the Florida defendants, and including, as well, Kammann, the purported pilot, and Velardi and Snyder, allegedly principals of CVL.

Jurisdiction is claimed (and not contested) under 49 U.S.C. § 1487(a), and venue is properly in this district, it being further noted that significant activity involved herein has and will occur in New Jersey.

This matter is before me at this stage on plaintiff's application for a preliminary injunction. It is well to review fundamental principles implicated by an application for a preliminary injunction. Traditionally, a preliminary injunction will not ordinarily issue except on a showing that the party seeking this extraordinary relief will be irreparably injured pendente lite if his application is denied. However, in cases where a violation of a statute, or of federal regulations implementing a statute, is alleged, as in this case, a showing of irreparable injury is not required. C. A. B. v. Donaldson Line (Air Services) Limited, 343 F.Supp. 1059 (S.D.N.Y. 1972); C. A. B. v. Modern Air Transport, Inc., 81 F.Supp. 803, 806 (S.D.N. Y.1949), aff'd, 179 F.2d 622 (2d Cir. 1950). There must be shown, however, in addition to the alleged statutory violation, that there is a reasonable probability of eventual success on the merits and that the public interest favors granting the relief thus sought. Penn Galvanizing Co. v. Lukens Steel Co., 468 F.2d 1021, 1023 (3d Cir. 1972); Winkleman v. New York Stock Exchange, 445 F.2d 786, 789 (3d Cir. 1971); A. L. K. Corp. v. Columbia Pictures Industries, Inc., 440 F.2d 761, 763 (3d Cir. 1971); Mixing Equipment Co. v. Philadelphia Gear, Inc., 436 F.2d 1308, 1315 (3d Cir. 1971); U. S. Steel Corp. v. Fraternal Ass'n of Steelhaulers, 431 F. 2d 1046, 1048 (3d Cir. 1970); Nelson v. Miller, 373 F.2d 474, 477 (3d Cir. 1967), cert. denied, 387 U.S. 924, 87 S.Ct. 2042, 18 L.Ed.2d 980 (1967); Kontes Glass Co. v. Lab Glass, Inc., 373 F.2d 319, 320 (3d Cir. 1967); Ikirt v. Lee National Corp., 358 F.2d 726, 727 (3d Cir. 1966); Joseph Bancroft & Sons Co. v. Shelly Knitting Mills, Inc., 268 F.2d 569, 573-574 (3d Cir. 1959); Warner Bros. Pictures, Inc., v. Gittone, 110 F.2d 292, 293 (3d Cir. 1940).

The public interest is entitled to great consideration in the necessary balancing of equities in a determination by a district court whether to issue a preliminary injunction or not. See Delaware River Port Auth. v. Transamerican Trailer Transport, Inc., 501 F.2d 917, 920 (3d Cir. 1974). See also, Commonwealth of Pennsylvania ex rel. Creamer v. United States Department of Agriculture, 469 F.2d 1387, 1388 (3d Cir. 1972); In re Penn Central Transportation Co., 457 F.2d 381, 384-385 (3d Cir. 1972); Nelson v. Miller, supra.

I shall deal with CVL and its principals first. The government pleads as to them as follows:

Count I

By virtue of the holding out of air transportation services to members of the general public, CVL and its principals are indirect air carriers or indirect foreign air carriers within the meaning of the Federal Aviation Act, 49 U.S.C.A. § 1301(3), (10), (19) and (21).

Count II

The conduct of the defendants, CVL, Velardi and Snyder, in holding out air transportation services to the public (and the conduct of the defendants, L & S International, Inc., Eastern Aircraft Services Ltd., R. K. K. Corporation and Leonard Simkovitz, Lloyd Kammann), through their combined activities constitutes them a single, integrated air carrier engaging in air transportation as an air carrier or foreign air carrier within the meaning of the Federal Aviation Act, 49 U.S.C.A. § 1301(3), (10), (19), (21).

Count III

The defendants, CVL, Velardi and Snyder are engaged in the direct operation of an aircraft as an air carrier or foreign air carrier within the meaning of the Federal Aviation Act, 49 U.S.C.A. § 1301(3), (10), (19), (21) and (26).

It is admitted that none of the defendants has a certificate of public convenience and necessity or foreign air carrier permit issued by the C. A. B. It is this absence of certification which the government claims in Counts I-III is violative of 49 U.S.C.A. §§ 1371(a) and 1372(a).

Counts IV and V allege that as an air carrier or as an operation for hire defendants have failed to secure an appropriate air carrier operating certificate, see 49 U.S.C.A. § 1430(a)(4) and 14 C. F.R. 121.3, or an appropriate commercial operator operating certificate. See 49 U. S.C.A. § 1430(a)(5) and 14 C.F.R. 121.3(f).

Turning first to Count III of the complaint, it is alleged that CVL is a direct carrier. It is not disputed that CVL does in fact transport passengers from the New York Metropolitan area and more specifically Newark, N. J. to Antigua, B. W. I. on a leased Boeing 720 with the hopes that said passengers will gamble at CVL's casino operated by its principals, defendants Snyder and Velardi (Defendants' Brief, at 4). A fair reading of the lease as well as the affidavit of Snyder indicates that CVL and its principals have sole operational control over the aircraft. What is at the core of this suit and order to show cause is the characterization of that aviation operation carried on by CVL and its principals.

The government claims in Count III that the defendants have violated 49 U. S.C.A. §§ 1371(a) and 1372(a). § 1371(a) provides:

No air carrier shall engage in any air transportation unless there is in force a certificate of public convenience and necessity issued by the Board authorizing such air carrier to engage in such transportation.

§ 1372(a) provides:

No foreign air carrier shall engage in foreign air transportation unless there is in force a permit issued by the Board authorizing such carrier so to engage.

An air carrier under 49 U.S.C.A. § 1301(3) means "any citizen of the United States who undertakes, whether directly or indirectly or by a lease or any arrangement, to engage in air transportation." A foreign air carrier, under 49 U.S.C.A. § 1301(19) means "any person, not a citizen of the United States, who undertakes, whether directly or indirectly or by lease or any other arrangement, to engage in foreign air transportation." Air transportation and foreign air transportation mean "the carriage by aircraft of persons or property as a common carrier for compensation or hire . . ." (emphasis added). It is stipulated that the principals of CVL are citizens of the United States and that CVL is a citizen of Antigua. Thus, if the government can show a reasonable likelihood of success on the merits as to the violations claimed in Count III, any violations attributable to the principals would come under 49 U.S.C.A. § 1371(a) and any violations attributable to CVL would come under 49 U.S.C.A. § 1372(a).

To show a likelihood of success on the merits, the government must show that there is a reasonable likelihood that CVL and its principals are "common carriers for compensation or hire." It is the defendants' position that there is no compensation involved in this case from any of their passengers, air transportation to Antigua being offered free of charge without any "tie-in," and as such the C. A. B. has no jurisdiction to require certification.

CVL and its principals have scheduled a series of weekly flights to Antigua, B. W. I., which are open to the general public with the hope of increasing business in CVL's Reef Casino, the only gambling establishment in Antigua. Advertising matter was sent to wholesale and retail travel agents in the New York area. The original material, advertising a series of Sunday-to-Sunday trips, commencing weekly from November 24, 1974, offered air transportation to Antigua plus a land package featuring seven nights in Antigua for $239.00 with an optional meal plan. (Complaint, Exhibit A). This advertisement, however, did not specifically state that the air transportation was free or that it could be obtained without the land accommodations. After the government informed CVL that it might seek an injunction against the flights, CVL, on advice of counsel, cancelled the Sunday-to-Sunday flights and instituted a Saturday-to-Saturday program, with the first flight scheduled for tomorrow, December 21, 1974. The original advertising was superseded by new advertisements distributed to travel agents which indicated that the "purchase of the land accommodations for $239.00 is not preconditioned to obtaining the free air transportation." (Defendants' Brief, Appendix E). It is alleged that all passengers previously solicited for the Sunday flights were resolicited, that all passengers were advised in writing that the land accommodations were optional and that refunds would be forthcoming for those who wished to fly but wished to find accommodations other than those offered in the brochure in Antigua (Defendants' Brief, at 7-8). CVL, it is alleged, further instructed travel agents on ...